Changes will see many Universal Credit claimants change what they need to do in exchange for receiving their UC payments.
Note - the Administrative Earnings Threshold will increase again in January 2023 but this article is focussing on the change that happened on 26th September 2022.
The new rules affect UC claimants who are working part-time.
At the moment, those earnings above £355 per month if single, or £567 per month if a couple, don’t need to worry about attending lots of meetings with their Work Coach or looking for more work.
But this ‘Administrative Earnings Threshold’ is being increased meaning some will be moved from the ‘light touch’ to the ‘intensive work search’ labour market regime. These claimants will have to attend mandatory work search interviews and undertake work search activities or risk being sanctioned.
Former Work and Pensions Secretary Thérèse Coffey said the government's new approach would "help claimants get quickly back into the world of work while helping ensure employers get the people they and the economy needs".
This change could also impact claimants whose UC award includes a Transitional Element if they stop working, receive just Statutory Sick Pay (SSP) for a prolonged period or see a sustained drop in their earnings – see below.
What’s changing?
From 26th September 2022, the Administration Earnings Threshold (AET) will be raised:
- from £355 to £494 a month for a single claimant
(ie equal to or more than 12 hours at the national minimum wage)
- from £567 to £782 a month for a couple
(ie equal to or more than 19 hours at the national minimum wage)
It is estimated that this change will move around 114,000 claimants who are currently in the ‘light touch’ regime across to the ‘intensive work search’ regime.
In addition, the DWP will be developing a new labour market regime for ‘light touch’ claimants that will enable them to access support through the Jobcentre Plus.
Example: Khadijah receives UC to top up her wages and help pay her rent. She works 10 hours a week and her net earnings are £450 a month. She is in the ‘all work-related requirements’ conditionality group. Up until 26th September she had little contact with her Work Coach and no work-related requirements. From 26th September she was moved from the ‘light touch’ to the ‘intensive work search’ regime and she has fortnightly appointments with her Work Coach and work-related activities that keep her busy for at least 20 hours a week.
What about fluctuating earnings?
Where a claimant's earnings vary from week to week, the DWP will consider whether their average weekly earnings are above their ‘earnings threshold’.
Average earnings are worked out either over a three month period or, where the worker has a recognised cycle of work, the earnings are averaged over that cycle.
It appears that the wages taken for the averaging will be based on the wages actually paid within each Assessment Period (ie as used in the UC calculation) – even where the claimant receives their wage payment weekly etc.
Example: Jamie works shift work at a local factory and his wages vary depending on how many hours he works. Some weeks he can be earning £150 a week, other weeks it can be as low as £100. Jamie is fit and healthy and single with no children or caring responsibilities. Over the last 3 months Jamie's wage has averaged out at £520 a month. As his average earnings are below his Conditionality Earning Threshold but above the Administrative Earnings Threshold so he is in the ‘all work requirements group’ and the ‘light tough regime’.
Getting a Transitional Element?
This change could also impact claimants whose UC award includes a Transitional Element if they stop working, receive just Statutory Sick Pay (SSP) for a prolonged period or see a sustained drop in their earnings.
The UC Regulations state that where a claimant’s UC award includes a Transitional Element and:
- their earnings have been below the Administrative Earnings Threshold for three Assessment Periods, and
- in their first Assessment Period their earnings were equal to or above that level,
then they will lose the Element from the following Assessment Period.
Example: Andy has been claiming UC to top up his wages of £500 a month and help pay his rent. He moved onto UC 4 months ago after receiving a migration notice. He was previously on WTC with a disabled worker element. His UC award includes a Transitional Element. Andy lost his job two months ago. If he doesn’t find a new job within the next few weeks he will lose the Transitional Element in his UC and see a further drop in income.
Served with a Migration Notice
Under the managed migration process a legacy benefit claimant who has received a migration notice has up to three months within which to make their claim for UC.
This ‘window’ gives the claimant the opportunity to consider if there is a ‘best’ time for them to claim.
Where a claimant is working and their total assessable earnings for UC could fall above or below the Administrative Earnings Threshold in a Monthly Assessment Period, then it may be better for them to ensure their earnings are below the AET in their first Assessment Period. This would mean that if they then lost their job or reduce their hours, they would not lose the Transitional Element.
Example: Maz has just received her migration notice. She works and her assessable net earnings for UC are £110 a week. She has taken advice from a Benefits Adviser who has worked out that Maz will be entitled to a small Transitional Element (this is calculated using a monthly wage figure regardless of when Maz claims UC). He has advised Maz to delay claiming UC for a couple of weeks so that when she does claim she will only receive 4 weekly wages in her first Assessment Period and so her assessable wages are below the AET ie below £494. This means that if she loses her job, become sick and receives just SSP for a prolonged period, or reduces her hours – meaning her earnings drop below £494 for three consecutive Assessment Periods, then she doesn’t lose the Transitional Element.
Background
A claimant's individual circumstance place them within a particular conditionality group and also an associated Labour Market regime (see table below).
This then defines the level of support they can expect to receive from the DWP in terms of preparing for, finding, or increasing work, as well as what they are expected to do in exchange for their UC.
|
Conditionality Group
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Labour Market Regime
|
|
No work-related requirements
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Working enough
ie earnings above Conditionality Earnings Threshold
|
|
No work-related requirements
|
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Work-focused interview only
|
Work-focused interview
|
|
Work preparation
|
Work preparation
|
|
All work-related requirements
|
Light touch
ie earnings between Administrative Earnings Threshold and Conditionality Earnings Threshold
|
|
Intensive Work Search
ie no earnings or earnings below Administrative Earnings Threshold
|
For those in the ‘all work requirements’ conditionality group, it is whether their monthly earnings are above or below the Administration Earnings Threshold (AET) that dictate whether they are in the ‘light touch’ or intensive work search’ labour market regime.
Light Touch Regime
Up until September 2022 a UC claimant placed in the ‘light touch’ regime, could pro-actively seek support from DWP to increase their earnings. The support provided depended on what would best address the individual request and the claimant’s specific needs. Any activities agreed with the claimant were voluntary and failure to complete the activities did not lead to a sanction. No information has been given regarding what changes the DWP intend to make.
Intensive Work Search
Those claimants in the ‘intensive work search’ regime have to attend mandatory face-to-face work search reviews. These will take place every week or fortnight.
They are expected to undertake (and provide evidence of) work-related activities for a maximum of 35^ hours every week such as: searching for jobs, creating online job profiles, registering with employment agencies, applying for jobs, researching childcare arrangements, contacting previous employers and getting references etc.
^ This can be adjusted for those with health conditions or caring responsibilities.